European stock market investors will latch onto next week's results updates, mostly from retailers, to see if shares can rise beyond one-month highs, even as interest rate concerns lurk in the background.
Marks & Spencer issues a trading update on Tuesday, followed by sales reports from French retailer Carrefour, cosmetics firm L'Oreal and trading reports from Burberry and GUS on Wednesday. Stock markets were briefly supported by weaker-than-expected US employment data on Friday, which eased rate rise worries, but then gave up gains.
The US jobs market added 121,000 workers in June, up from a revised 92,000 the previous month but well below the 185,000 expected by economists. "This data is quite supportive for markets because it's consistent with US growth slowing down a bit but still not a disaster," Chris Iggo, a strategist at AXA Investment Managers, said. "It probably means that we are close to the peak of the Fed's interest rate cycle.
By 1400 GMT the pan-European FTSEurofirst 300 index was at 1,314.4, on course to end the week mostly flat after two weeks of gains. The benchmark rose to a near five-week high of 1,321.7 on Monday, up 7 percent from a seven-month low struck last month on concerns about rising interest rates and a US slowdown.
ECB SIGNAL A Reuters poll showed that the European Central Bank is now almost certain to raise interest rates on August 3 after its president gave a strong signal it was preparing for an early move to contain inflation pressures.
The ECB left interest rates on hold at 2.75 percent as expected this week, but hawkish language from ECB President Jean-Claude Trichet prompted the majority of economists to bring forward the timing of the expected next hike from the August 31 meeting or later.
"Too much US growth raises worries about further Fed tightening, while a strong slowdown in US growth will raise worries on whether the Fed has already over-tightened," said Bernd Meyer, a European strategist at Deutsche Bank, in a note.
"Even optimists who believe that hitting this narrow path is possible like us, have to acknowledge that markets are unlikely to become convinced of this soon," he said.
"We believe this macro uncertainty will continue to keep the focus distracted from the highly attractive corporate fundamentals, despite the Q2 reporting that we expect to be positive."
Among other company reports, French engineering firm Alstom unveils first quarter sales on Tuesday, followed by results from sugar company Suedzucker and market research firm Taylor Nelson on Thursday. The spotlight will also be on Britain's Standard Life, which is set to make its market debut on Monday. Europe's largest mutual insurer is set to price its initial public offering at around 230 pence per share, the upper end of an expected 220-230p range, helped by strong retail demand, sources said.
At 230p the price would be near the bottom of a 210-270 pence price range set by Standard Life last month. On Friday, the exact IPO price of Russian oil firm Rosneft is due to be announced, with the state-owned company planning to raise up to $11.6 billion by floating between 13 and 19 percent of its stock.
Demand from western and Asian oil companies will likely guarantee the success of the IPO, despite some fund managers balking at the offer price, sources close to the float said.
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